Drought in South America increases demand for U.S. soy.

The USDA on Feb. 9 boosted soybean meal exports from the U.S. as drought limits soy production in South America. (Photo: Joclyn Bushman/Iowa Soybean Association)

WASDE report looks South, prices inch near $16

February 10, 2022 | Bethany Baratta

In its World Agriculture Supply and Demand Estimates report released this week, the USDA revised its forecast for Brazilian soybean production lower due to drought.

A 25-million-bushel increase in U.S. soybean crush, now forecast at 2.215 billion bushels, is attributed to favorable crush margins and expected strong demand for soybean meal exports.

Soybean meal exports were reduced in the February report for Argentina, Brazil, and Paraguay as an ongoing drought reduces soybean meal prospects there.

The USDA reduced its production estimate for the Brazil soybean crop to 134 million metric tons (5.27 billion bushels), down 5 million metric tons from the January report.

The Argentinian soybean production forecast was also reduced by 1.5 million metric tons to 45 million metric tons (1.77 billion bushels), the February report said.

Paraguay soybean production was lowered 2.2 million metric tons to 6.3 million metric tons (248 million bushels).

With U.S. soybean exports unchanged, ending stocks are reduced 25 million bushels to 325 million bushels.

Price flex

The U.S. season-average soybean price for 2021/22 is forecast at $13 per bushel, up 40 cents from January. After the report, however, soybean prices on the Chicago Board of Trade also bounced higher.

March soybean futures settled at $15.94, up 25¾ cents on Feb. 9. May soybean futures closed at $15.95, 23 cents higher.

The USDA raised the price forecast for soybean meal at $410 per short ton, up $35. The soybean oil price forecast is raised 1 cent to 66 cents per pound. March soymeal futures settled at $461.90 per short ton on Wednesday on the CME Group, up $7.80 per short ton.